Finance & Governance updates Public Procurement Ordinance

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Chief Financial Officer Betsy George (photo courtesy of the City of Oxnard)

Oxnard – The Finance & Governance Committee updated its existing procurement regulation on Tuesday, April 12 to leverage its centralized purchasing and electronic cross-functional approval process.

Deputy Chief Financial Officer Mark Sewell introduced the item to the committee and said the permit changes the permitting authority within the ordinance to align with community best practices and new, modern system capabilities.

The city is preparing to start its core financial phase with Tyler-Munis.

The city passed its Procurement Ordinance on June 19, 2018, defining the roles of all of the city’s procurement processes.

As a result of the city’s multi-year investment in a new ERP system, the changes change the buyer’s approval authority for an annual dollar change per vendor from $100,000 to zero and the city department manager’s authority for an annual dollar limit per supplier from zero to $50,000 and changing the city manager’s permitting authority from $5,000 to $100,000 per provider,” he said.

The changes are recommended for approval authority on all contracts, purchase orders, change orders, and work orders, except for real estate, which remains unchanged.

“The recommendation to move $100,000 approval authority from the buyer within the Treasury Department to department heads is consistent with the budgetary responsibilities that department heads have to meet the goals and objectives set by them and the City Council.” , he said. “No further changes to the permit limits for the city manager, for public works or the city council are recommended under this change.”

He noted that all procurements still need to be reviewed and approved by the buyer to ensure compliance with all relevant policies.

“These changes are recommended because it is an opportunity to update the regulation to take advantage of the new system functionality of the ERP system being implemented,” Sewell said. “The new ERP system features centralized purchasing that allows for the reporting and verification of all transactions by suppliers, regardless of which department is using them. It has electronic approval processes that are reviewed and approved by other departments such as risk management, prosecutors, information technology (IT) and finance.”

He said the system tracks and logs all user actions and is fully auditable.

“Electronic document storage is standard and required as part of all document procurement, with the City being able to add all tender documents, justifications, insurance documents and any other elements relevant to this procurement during the approval process and after the transaction is completed for review purposes,” he said. “Each procurement item is subject to an automated budget review, which means that no purchasing activity can take place in excess of the budget approved by the Council.”

He said there is advanced and consolidated citywide vendor and transaction reporting to improve performance and policy oversight.

“The transfer of authorization from the use of city funds to operational departments is consistent with the responsibility for service delivery to the community,” he said. “This change will increase operational efficiencies as part of the transition to the new modern ERP system with automated budget review and electronic approval routine.”

Chief Financial Officer Betsy George told the committee that the primary purpose of the action was to separate order execution from order approval.

“In the past, our processes required the purchasing manager to both approve the purchase, you know, an approved budgeted item from the city council’s budget, and the purchasing manager to execute the purchase order,” she said. “This shifts the authority to approve the budget to the manager who is responsible for his area, and then the purchasing manager still executes all purchase orders.”

Chairman John Zaragoza commented that as the department head is more in charge of the operational end he has the opportunity to ensure he is consistent with funding.

“They see it now in the process when they route requests to the process,” George said. “You see that; it just wasn’t in the regulation for the department heads and department heads to see.”

Committee member Gabriela Basua said she was a bit unclear after seeing the presentation and thanked George for the clarification.

“It goes from the purchasing manager or the person in charge to the director level to have those steps in between,” she said.

Also, in relation to procurement, Basua asked if it would be beneficial to increase the limit for public works projects to push the projects a bit further.

“I’m not sure if that’s something that’s holding up some of these public works projects or not, but maybe it would be a consideration to even increase our city manager’s authority to 250 and do the same with our public works,” she said .

George said that’s something she can take back.

“We just hired a new purchasing manager, so we wanted to bring the regulation back later in the fall with possible other changes,” she said.

Deputy City Manager Shiri Klima said the $200,000 limit on construction contracts is a state limit.

“We won’t be able to change that, but certainly there are other areas of public works that we can look at,” she said.

Basua said she’d like to give the public works director and city manager a little extra cushion to finalize the contracts rather than bring them back to committee.

“I know that our city manager has at least been very good at notifying us when he does these executions,” she said.

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